Exhibit 99.1
NONCOMPETITION AND NONSOLICITATION AGREEMENT
This Agreement is made this 2nd day of October, 1997
(Effective Date) among CPI Corporation ("CPI"), a Delaware
corporation, Xxxxxxx Kodak Company ("Kodak"), a New Jersey
corporation, and Fox Photo, Inc. ("Fox"), a Delaware
corporation.
WHEREAS, Kodak, Fox and CPI and certain of its affiliates
have entered into a Stock Purchase Agreement of even date
herewith pursuant to which Kodak is acquiring 49% of the common
stock of Fox from Holding so that Kodak will own 100% of the
issued and outstanding common stock of Fox, and terminating the
Stockholders' Agreement between Kodak, Fox, CPI and Holding and
certain other transactions described in the Purchase Agreement;
and
WHEREAS, Kodak desires to preserve its investment in Fox
and the business of Fox and its subsidiaries, which consists of
(a) retail photofinishing and related photoprocessing,
photoimaging and image transmission operations; (b) retail
sales of photographic and photoimaging products and services
related to amateur photography; (c) development of systems,
software and techniques to expand consumer participation in the
photofinishing process; and (d) sales of photographic and
photoimaging products by professional portrait studios and
other services related to professional photography to the
extent conducted by Fox and its subsidiaries on the date hereof
(the "Business"); and
WHEREAS, the covenants and agreements contained in this
Agreement are important to the value and prospects of the
Business; and
NOW, THEREFORE, in consideration of Ten Million Dollars
($10,000,000) paid by wire transfer from Kodak to CPI on the
date hereof and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS:
(a) "Protected Persons" shall mean Kodak, Fox and their
subsidiaries and affiliates, successors and assigns;
(b) Restricted Persons shall mean CPI and its subsidiaries
and each of their respective subsidiaries and affiliates,
successors and assigns;
(c) "Restricted Area" means the North America, both
continental and the islands belonging to the countries located
in continental North America; and
(d) Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase
Agreement.
2. NON-COMPETITION. During the period beginning upon the
Effective Date and ending on the second anniversary thereof and
except as permitted below, the Restricted Persons shall not,
and shall cause their affiliates not to, directly or
indirectly: (a) own, manage, operate or control any business
competitive with the Business other than ownership of less than
5% of the outstanding capital stock of a publicly traded
corporation; (b) enter into strategic alliances, preferred
provider or other publicly announced and promoted affiliations
with any provider of goods or services competitive with the
Business (other than cross-promotions and customer-list
exchanges comparable with those used by Restricted Persons on
the date hereof), or (c) otherwise engage in competition with
the Business in the Restricted Area, provided, however, nothing
contained in clauses (a), (b) or (c) shall restrict or prohibit
any Restricted Person from engaging in any business activity in
which it engages on the date hereof.
Kodak and Fox acknowledge that CPI and/or its
subsidiaries (i) own and operate professional portrait studios
throughout the United States, Canada and Puerto Rico and wall
decor stores in the United States ("CPI Business"); (ii) are
engaged in research and development operations relating to
imaging products and services and imaging business operations;
and (ii) desire to expand and further develop the CPI Business,
the research and development activities and may desire to add
new lines of business. Kodak and Fox further acknowledge that
CPI's existing research and development projects include a
Store Automation System for Minilabs ("SAS Minilab"), a Photo
Preview/Photo Proof System ("Photo Preview System"), a Photo
Preview Online System and image archiving services
(alternatively and collectively, "R&D Products") and that CPI
intends to sell rights to use the R&D Products, including the
SAS Minilab and the Photo Preview System to third parties,
including retail photofinishing businesses that may compete
with Fox.
Kodak and Fox agree that this Agreement shall not
restrict the continued operation and development of CPI
Business or the research and development operations conducted
by CPI and/or its subsidiaries, including the commercial
development and licensing of the R&D Products and other imaging
products, services and systems; provided that CPI and its
subsidiaries shall not own, in whole or in part, or operate any
business in the Restricted Area that is engaged to any material
extent in retail photofinishing operations (but not including
operations primarily engaged in professional portraiture
operations).
CPI agrees that it (or its subsidiaries owning such
products) will offer to negotiate in good faith with Fox for
licenses to use the SAS Minilab, the Photo Preview System and
any other imaging systems developed by CPI or its subsidiaries.
All such licenses shall be negotiated at arms length and shall
include fair market terms which, during the first two years
after commercial availability of any such product, shall be no
less favorable than those offered to any other customer of CPI
or such subsidiary at the time Fox's order is placed with CPI
or the subsidiary.
3. NONSOLICITATION. During the period from the date
hereof and ending on the second anniversary thereof, the
Restricted Persons shall not, and shall cause their affiliates
not to, directly or indirectly, on their own behalf or on
behalf of any other person in any manner whatsoever: (a)
without the prior written consent of Fox, induce or endeavor to
induce or hire any employee of the Business ("Covered Person")
to terminate his, her or its association with the Business or
in any manner interfere with the relationship of a Protected
Person with such Covered Person, provided, however, the
provisions of this Paragraph 3(a) shall not restrict the
Restricted Persons from hiring or consulting with a Covered
Person if such Covered Person's employment was terminated by
the Business or such Covered Person had ceased to be employed
or retained by the Business for at least one year prior to the
date of being solicited for hiring by a Restricted Person; or
(b) induce or endeavor to induce, or assist others to induce
any supplier of any Protected Person, whether existing on the
date hereof or hereafter arising, to terminate its relationship
with a Protected Person or do anything, directly or indirectly,
to interfere with the business relationship between a Protected
Person and any such person; or (c) in any manner whatsoever,
induce or endeavor to induce, or assist others to induce, any
customer, distributor, channel partner or other person
purchasing or distributing the products or services of any
Protected Person, to terminate its use, purchase or further
purchase of the products or services of any Protected Person,
or to purchase substitute or replacement products or services
from any other person.
4. In the event that any Restricted Person breaches any
provision of this Agreement, the Protected Persons shall have
the following rights and remedies, each of which shall be
independent of the others and severally enforceable, and each
of which shall be in addition to, and not in lieu of, any other
rights and remedies available to a Protected Person under law
or in equity, and each of which may be pursued by a Protected
Person in any order that either of them desires:
(a) SPECIFIC PERFORMANCE. In the event that any
Restricted Person breaches any provision hereof, the Protected
Person shall have the right and remedy to have the provisions
of this Agreement specifically enforced by injunctive relief in
any court of competent jurisdiction, without posting a bond or
other security of any kind whatsoever, it being agreed that any
breach of this Agreement would cause irreparable injury to the
Protected Persons and that money damages alone would not
provide an adequate remedy to the Protected Persons.
(b) DAMAGES AND OTHER REMEDIES. In the event that any
Restricted Person breaches any provision hereof, the Restricted
Persons shall be jointly and severally liable to the Protected
Persons for all losses and damages suffered by any Protected
Person as a result thereof and other right or remedy which any
Protected Person may have at law or in equity.
(c) COSTS OF ENFORCEMENT. In the event a Restricted
Person is found to have breached its obligations in Sections 2
or 3 of this Agreement, the Protected Persons shall have the
right to be paid by the Restricted Persons, jointly and
severally, for all of the Protected Persons reasonable costs
and expenses, including reasonable attorneys' fees and
disbursements, incurred in enforcing the terms of this
Agreement.
5. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without
reference to its principles of conflicts of law. The Restricted
Parties acknowledge and agree that the provisions of this
Agreement are reasonable and valid in duration and scope and in
all other respects. If any court of competent jurisdiction
determines that any of the provisions of this Agreement, or any
part thereof, is invalid or unenforceable, such court shall
have the power to reduce the duration or scope of such
provision, as the case may be, to the extent reasonably
necessary for the protection of the Protected Persons and, in
its reduced form, such provision shall then be enforceable.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision.
6. This Agreement, including any dispute or controversy
arising out of or related to this Agreement or the breach
thereof, shall be subject to, governed by, and construed in
accordance with, the substantive and procedural laws of the
State of New York, without reference to its principles of
conflict of laws. Each of the parties hereto irrevocably
consents to the exclusive jurisdiction and venue of the U.S.
District Court for the Southern District of New York in
connection with any action or proceeding arising out of or
related to this Agreement, unconditionally agrees that all
claims in respect of any such suit, action or proceeding may be
heard and determined in such federal court. Each party hereby
irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, (a) any objection which
it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Agreement in any federal court sitting in the Southern District
of New York, (b) the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding any such court,
and (c) the right to object, with respect to such suit, action
or proceeding, that such court does not have jurisdiction over
such party.
7. This Agreement together with the Purchase Agreement
and the other documents described therein constitute the entire
agreement of the parties with respect to the matters set forth
herein. The failure by any party to exercise any right under,
or to object to the breach by any other party of any term,
provision or condition of, this Agreement shall not constitute
a waiver thereof and shall not preclude such party from
thereafter exercising that or any other right, or from
thereafter objecting to that or any prior or subsequent breach
of the same or any other term, provision or condition of the
Agreement. Any consent granted pursuant to this Agreement
shall be in writing, executed by the person authorized by the
consenting party to receive notices, and shall be a consent
only to the transaction, act or agreement specifically referred
to in the consent and not to other similar transactions, acts
or agreements. No action taken pursuant to this Agreement
shall be deemed a waiver or consent by the party taking such
action of compliance by the other party with any of the
covenants or obligations of the other party contained in this
Agreement.
8. This Agreement shall be binding upon and inure to the
benefit of the Business, the parties and their affiliates and
their respective successors and assigns, including any assignee
of assets of the Business.
9. All notices and other communications hereunder shall
be in writing and shall be deemed given to the person if
delivered personally or upon sending a copy thereof by first
class or express mail, postage prepaid, or by telegram (with
messenger service specified), or reputable courier services,
charges prepaid, or by telecopier, to such party's address (or
to such party's telecopier):
If to Kodak or Fox, to:
Xxxxxxx Kodak Company
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxxxx
Managing Director, Strategic Business Investments
Telecopier: (000) 000-0000
With a copy to:
General Counsel
Xxxxxxx Kodak Company
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Telecopier: (000) 000-0000
and to:
Nixon, Hargrave, Devans & Xxxxx LLP courier:
Clinton Square 0000 Xxxxxxx Xxxxxx
X.X. Xxx 0000 Xxxxxxxxx, Xxx Xxxx 00000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx XxXxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
If to CPI, to:
CPI Corp.
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to:
CPI Corp.
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
and a copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
Telecopier: (000) 000-0000
or to such other person, address or telecopy number as any of
the foregoing may have designated for that purpose by notice to
the others.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CPI CORP.
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
Chairman and Chief Executive Officer
XXXXXXX KODAK COMPANY
/s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
Senior Vice President
FOX PHOTO, INC.
/s/ X. X. Xxxxxxx
-----------------------------------
X. X. Xxxxxxx
Director
